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Quality Baking Company produces two kinds of cookies which sell for $.50 and $.70 per dozen with direct (variable) cost of $.30 and $.40, respectively. The bakery has no difficulty in selling all the cookies it can produce. The problem that management faces is a different one. There are only 10 hours of labor available and oven capacity is limited to 80 dozen cookies. For making one dozen cookies it takes 1 hours of labor for cookies of the first kind and 2 hours for cookies of the second kind. (a) Formulate the problem in mathematical terms, sketch the set of feasible solutions and find the coordinates of the extreme points. (b) Test the objective function at each extreme point in order to find optimal solution(s). (c) Are all available resources fully utilized at optimal product mix? Interpret results.

Financial Management, Finance

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